The Financial Industry Regulatory Authority is a congressionally authorized independent and non profit outfit. Congress established them to safeguard the investors of America by ensuring that the stock market industry runs honestly and fairly for all participants.
FINRA is not an agency of the government, even though they have broad disciplinary and enforcement powers. The organization tirelessly works to ensure the integrity of the market and protection for investors by regulating the securities business.
FINRA carries out these duties in a variety of ways. They investigate brokerage firms to make sure they abide by the rules. The not for profit creates and then enforces these rules that govern the actions of more than 3,941 securities companies who have over 641,157 brokers on staff. FINRA also encourages transparency in markets and settles disputes. The group does all of this without taxpayers having to support them via taxes.
The authority works every day to make sure individuals selling securities are tested and licensed. They ensure all advertisements for securities utilized to sell the products are clear and truthful. FINRA holds companies to a high standard for only selling suitable investments to individuals that are appropriate to their needs. They ensure that every investor obtains full disclosure about their investment before they buy it.
The independent agency carried out 1,512 disciplinary actions on registered firms and brokers in 2015. This allowed them to collect fines of over $95 million. They mandated that $96.6 million be given back to investors who where harmed in these and other actions. The group handed over 800 different insider trading or fraud cases to other agencies like the SEC for settling or prosecuting the same year.
Ultimately FINRA’s goals are to deter misconduct in the industry. They do this by enforcing rules for everyone. This is not only the rules that they create. The group also enforces the Municipal Securities Rulemaking Board’s regulations and federal securities laws as well. They make the qualifying exams and require brokers to come to continuing education classes.
The organization puts hundreds of their own financial examiners in the field to check on the way these brokers carry out their business. Their main concern is for the investors and risks to the markets. They follow up on complaints filed by investors and other suspicious activities.
They also review all advertisements, brochures, websites, and communications to be certain brokers are fairly presenting their products. This amounts to approximately 100,000 different communications and advertisements they examine and approve between broker firms and their investors.
FINRA also disciplines rule breakers. They use their authority, technology, and professional experts to rapidly react to wrongs. The organization has the authority to fine brokers, suspend them, or expel them from the business.
The independent agency also possesses technology that is potent enough for them to be able to review various markets and pick up on possible fraud. They are able to gather data in such a way to keep tabs on insider trading or other practices that give broker firms advantages that are unfair. To this effect they process anywhere from 42 billion to 75 billion transactions daily to have a full picture of U.S. market trading.
The group is also involved in resolving disputes in the securities’ business. This pertains to problems between investors and brokers. FINRA handles almost 100% of all mediations and arbitrations that are related to securities. They hear these disputes in 70 different locations. This includes one hearing center in every state, Puerto Rico, and London.